The two biggest banks in the United Arab Emirates reported a decline in annual profit that was less severe than expected as the lenders brace for the full brunt of the economic fallout from the coronavirus pandemic and lower oil prices.
Emirates NBD PJSC, Dubai’s biggest lender, and First Abu Dhabi Bank PJSC, its counterpart in the UAE capital, both maintained their dividend payouts for 2020 despite a surge in impairment losses as their buffers to protect depositors against shocks remained strong. Shares of both banks rose.
While an acceleration in the pace of vaccine distribution and a normalization in travel is helping to partly offset the drop in crude prices and output due to the Covid-19 outbreak, the economy is struggling to gain traction. The profitability of UAE lenders is expected to remain under pressure this year as the central bank phases out support measures introduced to shield the economy from the damage caused by the Covid-19 outbreak and bad debts climb, according to S&P Global Ratings.
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